The Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy, the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) are issuing this Investor Bulletin to help investors better understand the designations financial professionals use.
What is a financial professional designation?
Financial professionals typically display designations as letter abbreviations that follow their names. A financial professional designation is like a certification or credential. A financial professional might use a designation to distinguish themselves from their competitors and to signal that they have particular expertise. Private organizations, such as trade groups or professional organizations, typically grant these designations.
Are financial professional designations different from registration or licenses?
Yes, financial professional designations are different from registration or licenses.
The SEC, state regulators, or self-regulatory organizations (SROs) such as FINRA require individual investment professionals to register as broker-dealer representatives (also called registered representatives), investment adviser representatives, or sole proprietor investment advisory firms. Professional designations, on the other hand, aren’t issued or overseen by federal or state regulatory authorities or SROs and aren’t a legal requirement.
Working with registered investment professionals affords protections for investors that a designation alone cannot provide. For example, some registrations require passing one or more qualification examinations and complying with continuing education requirements. Registered investment professionals are subject to regulatory oversight and disciplinary action for misconduct. They’re also required to provide certain disclosures to their clients and customers.
A designation from a private organization does not tell you whether a financial professional is registered or licensed with a regulatory authority. Always check that your financial professional has the required registration and licensing to provide the type of financial services or products that you need. You can do this using the Check Out Your Investment Professional search tool on Investor.gov, by using FINRA BrokerCheck, or by contacting your state securities regulator.
Are all financial professional designations the same?
No, not all financial professional designations are the same.
Some designations require a financial professional to complete at least some level of training, pass exams, meet ethical standards, have relevant work experience, and take continuing education to maintain them. However, requirements vary, and a relatively small number of designations are difficult to obtain.
Other designations require very little time, effort, and experience to obtain and/or may not have any continuing education requirements. Some financial professionals might simply purchase, or even make up, certain designations.
It might be difficult to confirm whether a designation is real or meaningful. In addition, the private organizations that grant designations don’t always have a process for filing complaints about misconduct or for disciplining their designation holders.
Also, a financial professional who lacks a designation might not necessarily have less experience or be less qualified or less ethical than those with designations.
If you have questions about what a financial professional designation requires, there are resources you can consult, including those provided below.
What can I do to learn more?
- FINRA operates a Professional Designations database where you can learn about particular designations. FINRA is an SRO overseen by the SEC. Like the SEC and state securities regulators, FINRA does NOT grant, approve, or endorse any professional designation.
- Check with the organization that granted the designation. Professional organizations might offer information about the designations that they grant. In some cases, the granting organization’s website might allow you to verify whether a person has earned a certain designation.
- Check that an investment professional is licensed by or registered with the SEC, state securities regulators, or FINRA with the Check Out Your Investment Professional search tool on Investor.gov. You can also use this search tool to check a registered person’s background, including any disciplinary history or customer complaints. Information is available about their firm as well. Learn how to use our search tool by reading Investor Bulletin: How to Use the Investment Professional Search Tool on Investor.gov.
- Learn more about registered financial professionals generally at Investment Professionals | Investor.gov and at FINRA.org.
What questions should I ask?
In addition to the steps outlined above, talk with the designation holder. Ask questions about the financial professional’s designations, such as:
- What organization awarded your designation?
- What does this designation mean?
- What training, ethical, and other requirements did you undergo to receive the designation?
- Did you have to take a course or pass a test?
- Does the designation require a certain level of work experience or education?
- To maintain the designation, are you required to take and pass refresher or continuing education courses? If so, how often?
- Does the organization that granted your designation have a process for filing a complaint against a designation holder? And if so, do they publish the complaints and their outcomes?
For More Information
SEC:
Investor Bulletin: How to Select an Investment Professional
Investor Alert: Beware of False or Exaggerated Credentials
FINRA:
Professional Designations and Credentials
Investor Insights: 3 Things to Know About Financial Designations
NASAA:
NASAA Investor Alert: How to Check Your Broker or Investment Adviser
NASAA Informed Investor Advisory: Understanding Broker-Dealer Fees
